Stroh's Beer 1970's commercial0:29

THE powerful and rich Stroh family was once one of the richest families in America.

In 1988, the family was valued at $700 million by Forbes, which would be worth $9 billion in today’s terms if you matched the S&P 500.

According to Forbes, within a year, the steep decline of the Strohs’ fortunes would be set in motion with a series of bad business decisions that would see the once-illustrious clan almost penniless.

The Strohs’ prosperity, started with a German immigrant, Bernhard Stroh, in 1850 Detroit. He started with $150 and a family recipe for beer. For more than 100 years, the family business grew steadily in the Great Lakes region, taking advantage of the post-war boom years which saw it increase its sales from half a million barrels in 1950 to 2.7 million barrels in 1956.

The 1980s was the decade of real affluence, but also folly, for the family owned and run business. Peter Stroh took the reins in 1980 and had ambitious expansion plans. First, he bought the New York-based brewer F&M Schaefer. But it was the next purchase which set the path for the Stroh business.

In 1982 Peter Stroh borrowed $500 million against the company’s then-$100 million value to gobble up the Joseph Schlitz Brewing business in Milwaukee. It was all part of the grand plan of national reach. The acquisition made Stroh the third biggest brewers, with seven plants, in the US, behind Anheuser-Busch and Miller.

But it couldn’t match the ad spend of its bigger rivals and resorted to price to survive, which whittled away its margins. It also missed the defining trend of the times: light beer. The emergence of the Coors business (which has since merged with Miller to become MillerCoors) saw Stroh Brewery fall to fourth place in a market that could only really sustain three big breweries.

The old Stroh’s logo.

By 1989, the company was in dire trouble. It sacked one-fifth of its white-collar work force. The following month, Peter Stroh agreed to sell the business to Coors for $425 million, but the deal fell through when Coors reneged.

A desperate rebrand in an attempt to be more upscale saw sales plummet 40 per cent in one year. While it changed its packaging and brand positioning, Stroh failed to change the recipe and consumers saw right through it. Forbes said market share for Stroh brands fell from 13 per cent in 1983 to 7.6 per cent in 1991.

Failing to learn from his mistakes the first time around, Peter Stroh borrowed another $300 million in 1996 for the acquisition of another struggling brewery, G Heileman. A misguided diversification strategy into real estate and biotech saw the company coffers drain further to the tune of millions more.

By the late 1990s, and now under the leadership of John Strohn III, concerns about whether the company would be able to meet the interest payments on its debt saw the company sold off for scraps. By then, the company was only able to fetch, according to Forbes sources, around $350 million.

$250 million was used to pay off debts while much of the remaining $100 million was put into employees’ pension funds. The rest went into a fund for the dozens of Stroh family members who for decades had been living lavishly off the family’s fortunes. The fund paid out cheques until 2008 when the money ran out completely.

Frances Stroh, a fifth generation Stroh, remembered the money was flowing in the 1980s when the family’s fortune was at its peak. The largesse from the family money enabled the Strohs to enjoy mansions in gated communities, prestigious private schools, servants, club memberships and all the trappings of the privileged.